When the Rate of Interest in the Economy Increases

question 315

Multiple Choice

When the rate of interest in the economy increases

• A) the market price of existing bonds will fall.
• B) the transaction demand for money will increase.
• C) real Gross Domestic Product (GDP) will increase.
• D) the asset demand for money will increase.

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Definitions:

Distress

A situation where a person, business, or economy is undergoing severe strain, often due to financial difficulties.

Uncertain Outcome

A situation where the result cannot be predicted with precision due to variables that are not completely known or controllable.

Fear

An emotional response to a perceived threat, which can be real or imagined, and impacts both individuals and groups.

Motivates

drives individuals or groups to act in a certain way or to pursue specific goals, often by providing incentives or reasons.